Banking & Saving
What is the purpose of a checking account?
To store money for daily use and make payments easily.
What is a credit score used for?
To show lenders how likely you are to repay loans on time.
What is a deductible?
The amount you pay before insurance covers the rest.
What is a stock?
Ownership in a company.
What is a budget?
A plan for managing income and expenses.
What does FDIC stand for and what does it do?
Federal Deposit Insurance Corporation; it protects deposits up to $250,000 per account.
What does APR stand for?
Annual Percentage Rate — the yearly cost of borrowing money.
What does liability insurance cover?
Damage or injury you cause to others.
What is diversification?
Spreading investments to reduce risk.
What is identity theft?
When someone steals your personal information for financial gain.
What does “pay yourself first” mean?
Setting aside money for savings before spending on anything else.
What happens if you only pay the minimum payment on your credit card each month?
You pay more interest and take longer to pay off your balance.
What is a W-2 form used for?
It reports your annual wages and taxes withheld.
What’s the main difference between a traditional and a Roth IRA?
Traditional is pre-tax; Roth IRA is after-tax with tax-free withdrawals.
What’s the purpose of a warranty?
To guarantee product repair or replacement for a set period.
What’s the difference between a credit union and a bank?
Credit unions are nonprofit and member-owned; banks are for-profit institutions.
What’s the main difference between a secured and unsecured loan?
Secured loans use collateral; unsecured loans do not.
What is the purpose of health insurance?
To protect against high medical costs.
What does “risk vs. return” mean?
Higher risk investments usually offer higher potential returns.
What is opportunity cost?
The value of what you give up when making a choice.
What is compound interest?
Interest calculated on both the principal and previously earned interest.
Name two ways to improve your credit score.
Pay bills on time and keep credit card balances low.
What is the difference between a premium and a deductible?
Premium = regular payment for coverage; deductible = amount paid out-of-pocket before coverage starts.
What is the main advantage of investing early?
You gain more from compound interest over time.
How can you avoid falling for financial scams?
Don’t share personal info, verify sources, and report suspicious activity.